TANZANIA's chance to become Africa's third biggest gold producer is uncertain due to a drop in production as a result of rising operational costs.

African Barrick Gold (ABG) Vice-President of Corporate Affairs Deo Mwanyika said in Dar es Salaam on Tuesday that there is a long list of problems facing gold mining companies which hinder production boost.

"The rising operation costs made ABG to cut production by 10 per cent last year although the overall shipments of the metal went up to a record due to increase of price in the world market," he said.

Tanzania vies with Mali to be Africa's third-biggest gold producer. Mr Mwanyika said records show that it takes up to ten days to clear mining equipment at the Tanzanian ports while the same process could be handled in just three days in some other countries which also produce gold.

"The delays in clearing the equipment plunges the gold producing firms into heavy losses," he added. He said there is no hope in this year for the company to increase output due to unreliable power supply. The government has pledged to end power blues in the mining areas by end of this year, but as of today, no investments have been initiated, he said.

Since rail infrastructure from mining areas to the port is lacking the producing firms have opted to ferry the copper concentrates using trucks, the move that has almost doubled the costs. According to data from the Ministry of Energy and Minerals, exports rose to 3.04tr/- (1.9 billion US dollars) in 2011 from 2.24tr/- (1.4 billion US dollars) a year before.

Although gold output dipped to 37,000 kilogrammes (81,571 pounds) from about 40,000 kilogrammes the previous year, the value of the metal shipment increased. The increase in exports is attributed to higher prices of gold in the international market. Bullion for immediate delivery rose 13 per cent to 2.5m/- (1,563.70 US dollars) in London in 2011.

The total earnings from minerals increased to 3.2tr/- (2 billion US dollars) last year from 3tr/- (1.5 billion US dollars) in 2010, generating 2.6 per cent of Gross Domestic Product (GDP). However, gold production may drop further the coming year as African Barrick's Tulawaka mine and Resolute's Golden Pride operations are scheduled to wind up.

The report shows that Tulawaka will conclude surface mining by 2013 but the investor has an option to go for underground production or close. The government has already issued permit for underground production at Tulawaka.